Couples sometimes make strategic investments throughout their marriages to improve the family’s financial circumstances. Purchasing investment properties is a relatively common strategy. In some cases, the goal is to acquire residential properties and rent them out as a source of income.
Other times, the goal may be to repair distressed properties and flip them by selling them quickly for a profit. Some people even make long-term real estate investments by acquiring unimproved land and selling it years later for a higher price. Real property holdings acquired during the marriage are potentially at risk of division even if only one spouse has their name on the title for the property.
Those with investment properties sometimes agree to divide the properties or sell them. Occasionally, spouses negotiate thorough contracts that allow them to maintain joint ownership of investment properties after the divorce. Why might couples continue joint ownership despite divorcing?
1. Fluctuations in the market
Alabama has seen positive movements in the real estate market recently, but every neighborhood is different. Those intending to flip properties or holding parcels as long-term investments generally need to monitor the market carefully and time their listings appropriately. In some cases, couples may need to hold certain properties for years after a divorce to optimize the return on their investment.
2. Properties in mediocre condition
Rental properties and properties purchased for flipping may require significant investments and months of work to get them ready for a profitable listing. Trying to handle all of that work while simultaneously navigating a divorce is not necessarily the best option available. Couples may agree to retain joint ownership until they complete certain repairs in order to optimize the return on their marital investments.
3. Relying on the properties for continued income
In scenarios where spouses have developed a substantial rental portfolio, both spouses may rely on those properties for regular income. They may have left their outside jobs to work on property repairs and administrative matters. In such scenarios, it may be possible for the spouses to negotiate arrangements in which they continue to own property jointly and work together to share the proceeds generated by rental income.
Being flexible when preparing for a high-asset divorce can help people arrange for the best outcomes possible. Spouses who have investment property portfolios may require support as they decide how to address those properties.
